Author: Sara E. Skinner

I need to go back and make a correction in yesterday’s Bitcoin blog. It seems I way underestimated the size of the cryptocurrency world. Instead of Bitcoin being one of at least 10 other virtual currencies, one source I discovered shows it’s one of nearly 200. I stand corrected.

As promised, this blog with focus on other cryptocurrencies. And while the number of them seems to be growing almost weekly, the size of each vary widely in both price and market size.

For instance, Crypto-Currency Market Capitalizations (http://coinmarketcap.com/all.html) lists information on 198 different virtual currencies with a total market cap of almost 8 billion, as of March 29.

Not surprising, the largest is Bitcoin with a market cap of about $6.2 billion and a dollar price of $498.36. On the other hand, Number 196 is LeproCoin with a market cap of $1,300 and a price that’s a fraction of a penny: $0.00066.

Spreads like that say plenty about this virtual currency world. In addition to growing, investors need to do plenty of research being buying into any cyptocurrency format.

Visit the Bitcoin site and under the “Getting started with Bitcoin” heading is this tagline: “Using Bitcoin to pay and get paid is easy and accessible to everyone.”

Maybe it is. But virtual currencies come with a cost. In addition to risks and availability, transactions aren’t necessarily free.

Bitcoin’s site states that transactions may be free but that sometimes a fee is required: “The fee, when it is required, is usually worth less than 40 US cents.”

From FeatherCoin’s site: “Payments are fast, global, and secure with near zero payment fees.”

If you’re at all like me, you’ll find that the more research done on this subject and the more cryptocurrency sites visited, the more confused this virtual world can be.

That said, StableCoin’s site was pretty straightforward in explaining it all. On the home page was this: “Welcome to the future.StableCoin is a new type of decentralized currency. It is not controlled by any nation or company. Users all over the world are able to earn StableCoins by keeping track of all the transactions occurring on the network through a process called mining. The amount of coins released each year is controlled by a set of publicly known mathematical algorithms. Unlike currencies issued by nations, no one can create StableCoins out of thin air.”

Putting a little perspective on this world might be as simple as looking back on how it all got started and my what’s-in-a-name theory: Mt. Gox, the hugely popular and now bankrupt Bitcoin exchange site, is short for “Magic: the Gathering Online Exchange” and it certainly feels like there’s more than a little bit of magic to this world of cryptocurrency.

Again, learn all you can before partaking or investing and check out coinmarketcap.com/all.html for information about the 198 virtual currencies they have listed.

One of my neighbors thinks that Bitcoin is a fantastic idea and that it will be around 100 years from now. Warren Buffet has called it a “mirage” and not likely to last two decades. Netscape co-founder Marc Andreessen Communication considers this almost intergalactic currency to be “bullet proof”. With Bitcoin conferences cropping up all across the country no matter what you think, there is no discounting the fact that since reaching its all-time high the price has fallen 50 percent.

The Bitcoin (BTC) story is a complicated for those of us who think of “mining” as something that happens when drills are used to get stuff out of the ground. Or, that using a medium of exchange with nothing backing it –other than the appeal of no- to low-fees —offers a hot diggity dog opportunity for a host of legal and no-so legal transactions.

That said, while the Bitcoin story began in 2009, today it is only one of at least 10 other cryptocurrencies. Oops, that’s wrong it’s not 10 but closer to 200.

Great word cryptocurrency is, isn’t it? The sounds of it remind me of Superman’s home planet Krypton and I’m guessing the two have more in common than merely a similar sounding name. But more on that fantasy idea (is it really?) another day.

Today’s blog is Part 1 of 2 and will focus on how those in the know view this Bitcoin cryptocurrency. Part 2 will be a listing of the various other cryptocurrenices.

To keep things simple, here is what various sources think about Bitcoin:

• Promoters and many futurists love it and see it as the only way to complete transactions.

• The IRS ruled that Bitcoin and other cryptocurrencies aren’t currencies but property, are not fungible, i.e. interchangeable, and therefore subject to capital gains taxation.

• Vance Crowe, founder of Articulate Ventures, a business-consulting firm in Saint Louis, MO and huge Bitcoin enthusiast wrote: “Bitcoin is also not a mirage to the one million people with wallets registered on Coinbase. It is real to all of the people who push $12 million dollars of volume through the Bitcoin network daily, and counting…… Mr. Buffett is wrong to analogize Bitcoin as a check or money order because Bitcoin does not represent money, it IS money. …When someone sends me Bitcoin, it is instantly spendable in its current form. I need not “cash a check” because Bitcoin is already money. Do not think of Bitcoin as a means to transfer dollars, it holds value by itself and it is highly liquid…”

• The Florida Office of Financial Regulation issued a consumer alert warning about potential risks associated with purchasing, investing in and exchanging Bitcoin and similar payment mechanisms because they are unregulated and uninsured.

•Bitcoin backers in the Sunshine state say this virtual currency holds appeal because it’s a faster no-fee payment system that both merchants and consumers find appealing.

• Mt. Gox, once the world’s largest Bitcoin exchange, filed for bankruptcy in February 2014 because of cyber attacks. The loss was an estimated 750,000 Bitcoins worth hundreds of millions of dollars.

•Janet Yellen said the Fed has no jurisdiction over Bitcoins but that Congress should look into the regulation of virtual currencies.

In the end, risk is one thing, price volatility another and then there are profits—and losses.

This from Bitcoincharts and Wikipedia: In 2011, a Bitcoin was barely trading at $1. On January 5, 2013, it was at $13.36 and by April 1, had ballooned to around $100. On April 10, 2013 it was $230 then fell to a low of $68.49 on April 17.

Bitcoin reached its all-time high of $1,124.76 on November 29, 2013. Today, March 28, 2014, Bitcoin exchanged hands at over $503 according to CoinDesk

Being a value shopper, I figured by going to the boat show a few hours before it closed on Sunday would yield some attractive pricing on a floating vessel. For the most part, that wasn’t the case.

It’s clear that promoters of this year’s Palm Beach International Boat Show were overcome with joy at the response to this four-day event. In addition to who knows how much was racked up in the sales of yachts and ordinary people’s vessels, cocktails and food, Mother Nature did her part by adorning the party with perfect weather.

By the time I arrived, $20 parking could be had for a fraction less, no one was lined up at the ATM machines and few of the boat loan booths were beginning to take the brochures out of their tents. If this were an ordinary show, those might have been clues to the likelihood of picking up a little 100+ foot ditty for say $500,000 less. Not so.

As much as I know how incredibly fantastic I would look whipping around the waterways in one of Ferretti’s oh-so sexy Riva’s, it was a bigger yacht I had my eyes on. And instead of picking the priciest, I decided not to spend as much and choose the Westport W130.

Similar to entering a Buddhist temple, all the yachts at the show required taking your shoes off and leaving them behind. You also had to sign in—-something you don’t have to do when entering said temple.

I hadn’t had a recent pedicure, so figured it would be too vulgar of me to go onboard. After all, all I was really interested in was getting a deal.

Priced at $21.1 million, the sales person I spoke with wasn’t about to budge on price. And even though only three of these yachts are made a year, and this model was considered “new” although it was built n 2013, I was more than a little disappointed in no price wiggle room. Particularly when you consider the fact that it’s probably going to cost another $1.5 million a year to maintain this baby when crew, insurance, dockage, etc. etc. are figured in.

All of which got me to thinking: How much money does one have to have to be able to afford a $20+million dollar yacht? Certainly a fixed nest egg of $50 or $60 million won’t do. Pay for the yacht outright and that would leave someone almost penniless in no time at all.

So I’m figuring that you’ve got to have at least a 9-figure sized piggy bank to be able to afford the super yachting life. Unfortunately, I don’t have that yet.

On the other hand, if you like the style and don’t have the big bucks, there is always Flextime yacht programs. Buyers here hand over a chuck of cash, or finance the chunk, for the right to use their yacht when ever they choose than lease it out to others when its not in use. It’s a no maintenance kind of way to go and one that could bring in maybe 10 percent a year.

Decide to go that route and as it turns out, Palm Beach isn’t the best place for doing so. Capt. James Fachtmann, of Florida Yacht Group told me that Miami is a better place for doing so if picking up some income from your lux toy is what you want.

You’ve got to wonder who is really in charge when prices on Wall Street hit the skids during and after Fed Chairwoman Janet Yellen’s Wednesday afternoon remarks. It sure can’t be common sense investors.

For openers, Yellen said pretty much what money financiers had expected: Cutting another $10 billion in bond buying next month was considered likely to happen, unemployment hasn’t hit the target rate of 6.5 percent that the Fed is aiming for before making any hike in interest rate changes, and, inflation continues to remain below their 2 percent target.

But what spooked Wall Street was the Fed Chairwoman’s comment about a possible rate hike in six months. One talking head I listened to said that it was the mere utterance of a” six month” time frame that set pre-set computer trading programs into motion. And we all know when computers go wild, all hell can break loose as it did in this case, modestly: The DJIA closed down over 114 points, NASDAQ off almost 26 points and the S&P 500 down 11.5.

From where I sit, Federal Reserve Chairwoman Yellen’s first go it went pretty smoothly. She gave her spiel, answered reporters’ questions directly and even smiled every now and again. And of all the things she said, that reference to a possible rate hike in the not-so-very-distance future ought to have triggered a more positive response particularly from those in the housing industry.

While prices on homes have continued to climb, the number of those able to purchase homes has fallen since the Great Depression began. Why? Basically because banks and corporations have been hoarding cash instead of putting it to good let’s-grow-the-economy use. Meaning, banks have not been lending money—mortgage or otherwise – to anyone who doesn’t have a stellar credit rating. And private industry, i.e., corporations, has laid off people instead of hiring or creating new jobs.

It irks me to hear some people direct all of their angst regarding the Great Depression at the government. It’s not the government that is going to get American’s back working, purchasing new homes and buying more stuff. That’s the job of private industry.

If I were a realtor, I’d be tweeting every one I knew telling them that there’s no better time to purchase a home than now as interest rates aren’t going to stay low forever. Not a new story, but certainly one with more uumph behind it now. If I were in the home building and renovation business I’d be encouraging folks to build or renovate now. If I were selling any kind of home appliance that need financing I’d be doing the same. All for the same reason.

If I were a banker, I’d be inviting new and potential clients in for an open house and telling them about quick financing opportunities. If I were a CEO, I’d let the world know I was hiring—and that working at my company paid well.

If I were a player on Wall Street, I’d take a look at my portfolio to see how it was positioned today and how it might be tweaked for a changing interest rate environment.

Every now and then, usually around bonus season, I wish I had stayed in the brokerage business. It was great fun —and challenging—selling securities. The reason I left the sales part of the financial industry was two-fold: First, I didn’t care for the fact that management valued your worth based pretty much only on how much money you made each and every month. It’s that old, “You’re only as good as your last sale” mentality. And, it was a turn off for me.

The second: I’m not 100 percent money driven. In my world, there is more value to a person’s life than the amount of money they earn.

Of course, neither of those reasons can keep the pangs of envy I feel away whenever I learn just how much the purveyors of money receive in bonus pay each year.

Last year, 2013, for instance, the average Wall Street bonus was up 15 percent from the year before (2012), was the most since 2008 and the third highest on record. Oh my.

So how much was the average bonus? Well, $164,530. Remember, that’s an average as many received far more and far less.

Putting that into some kind of local perspective, that’s more than three times the average annual salary of a person living in Palm Beach County. It’s around $52,800.

Given that the size of a bonus is doled out by one’s employer and their desire to reward their employees by paying a bonus, the amount each worker-bee receives is typically calculated and based upon that person’s annual salary.

So while someone on Wall Street or Main Street earning 50-some thousand dollars a year might get a three-or four-digit sized bonus,who can complain. Any b is better than none from where I sit—even though bonuses are subject to taxation.

Back to me and my non-bonus, (freelancers don’t get bonuses). I’m beginning to think that since my beat is Wall Street, there ought to be someone I can call to ask for a tiny piece of that bonus pie. Let me know if you know that person’s number.

These five-year birthday celebrations for a bull stock market really get to me. Why? Well, if I’m celebrating my 5th birthday, there is more than a reasonable chance that I’ll have a 6th, 7th and dozens more yearly birthdays going forward. Not so for stock market returns where the bulls and the bears battle it out year in and year out in hopes of gaining some modicum of bragging rights—like a 5-year celebration.

Now that that’s off my chest, five years is a reasonable amount of time to look back and review how one’s investments have performed.

To do so, instead of looking at market indices and specific stock prices I’ve decided to look at the performance of exchange-traded funds (ETFs). These investment products have proven to be popular with both the individual and institutional investing audience because of the diversity their offer and there low cost of ownership.

According to ETF data from the Bespoke Investment Group, here’s an overview of market returns for the 5-year period ending March 9, 2014:

• All 16 of the US index-related ETFs from the S&P 500 (SPY) to DJ Divided (DVY) fund returned impressive results to shareholders. Gaining the most was the S&P Smallcap 600 (UR) up 272.37 percent, followed by the Nasdaq 100 (QQQ) that gained 253.17 percent and the Russell 2000 (IWM), up 248.07 percent.

• The Consumer Discretionary ETF (XLY) was up the most with a 5-year gain of 318 percent, the Smallcap Growth ETF (IJT) was in second position with a gain of 288 percent, and coming in third was the Smallcap 600 ETF (IJR) with its gain of 272 percent.

• In country ETFs, Mexico (EWW) gained 180.6 percent giving it top performance honors and next in line was Germany (EWG) up 144.46 percent. The puniest country return was from the Brazil ETF (EWZ) moving ahead just +22.9 percent.

• Fixed-income ETFs returned modest gains with T.I.P.S. (TIP) gaining the most at 15.48 percent and t 1-3 year Treasuries (SHY) the least at 1.37 percent.

The coming five years are sure to produce different results. So before investing, don’t forget that Wall Street’s two sisters—risk and inflation—will be, as always, ever present. That means invest wisely and with purpose.

Rich or poor, we sure are goofy about our money. I mean, given the importance of the subject, it’s amazing how people can somehow forget about the money they’ve tucked away in retirement accounts. Or, are unable to keep the fortunes that their granny has passed on to them going on from their generation to the next.

As important as saving hundreds of thousands—if not millions— of dollars for retirement is, recent LIMRA Secure Retirement Institute research found it wasn’t unusual for American’s who worked for companies that offered defined contribution (DC) retirement plans to walk away from their job and leave the money behind.

When that happens, those accounts are referred to as “orphan” accounts. Who knows why the employee chooses to do so but what’s kind of interesting is that the richer the employee, the more likely they were to have an orphan account.

According to the research, 44 percent of those with household assets of at least $500,000 or more were likely to walk leaving the account behind vs. 38 percent with less than that in household assets.

To any orphan account owner, I’d suggest they keep track of their money. No matter who is in charge of managing your wealth, there is no guarantee of how long it will grow—or last.

On that same who-knows-how-long-it-will-last note, Tom Rogerson, senior managing director and Family Wealth Strategist at Wilmington Trust, reminded me that there’s no guarantee even the uber-wealthy will have fortunes that last for generations.

“If you look at the studies, families that have build up significant wealth, Palm Beach-type wealth, will find their wealth is gone by the end of the 3rd generation,” said Rogerson who will be in Palm Beach this week.” And 70 percent of it is gone by the end of the 2nd generation.”

Ouch. Now that’s a big silver spoon bummer.

What’s the best way to insure your family’s wealth gets passed on? Rogerson says communication is key. And, that families have to learn to communicate trust and work together.

In other words, if your family wealth is managed by the one-man rule, can it. Instead, open up to your fortune managed via a teamwork approach.

I’m a little late in getting this blog about America Saves Week posted. But, when you consider the subject—saving money—a little late is better than never.

Officially America Saves Week began on Feb. 24 and will end March 1. The program started in 2007 and its goal is to promote good savings behavior. Nice idea no matter what your income bracket is. And, particularly in a country where spending wields far more clout than saving.

“Only about one-third of Americans are living within their means and think they are prepared for the long term financial future. One-third are living within their means but are often not prepared for this long term future. And one-third are struggling to live within their means,” Stephen Brobeck, said executive director of the Consumer Federation of America and a founder of America Saves, in a recent press release.

Recent survey results from that organization show only about one-third of Americans feel prepared for their long-term financial futures, two-thirds say they are spending less than their income and roughly that same amount report they ” have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.”

I have a hard time believing that last point.

Looking back on my life, it seemed as though the biggest challenge to saving were those unexpected expenses that came along without any notice at all. Every time I had a few hundred dollars in a savings account the a.c. need repair or I needed a root canal. Almost always the cost for the repairs equaled the exact amount of money I had saved. Like that old joke about a thermos that keeps cold drinks cold and hot ones hot, I’d find myself mumbling, “How do it know?”

While I’ve never figured either out, I have learned that there’s more to saving money than putting a few bucks away each month. What makes a savings account grow is focused goal setting with no ifs, ands or buts excuses about adding to that coffer or taking money out of it.

As much as many of us might like to believe, there is no magic to having a boatload of money saved ten, twenty, thirty, forty or more years after you’ve begun. All it takes, as I wrote in the graph above, is setting a savings goal and following through with it.

And the best news of all is that you don’t have to be a Rockefeller or a Gates, have a high IQ or be a college grad or movie star to get it done. All you’ve got to do is begin. Today. Half way through national Savings Week.

Anyone stuck for how to save ideas might want to visit americasavesweek.org .

It’s one of those things everybody wants to know but is afraid to ask. Yup. I’m talking about how much money somebody makes. That’s one of those questions that more often than not gets a none-of-your-business response. But, thanks to the IRS, individual income tax return figures do offer some clues.

A few weeks ago the IRS published individual tax returns for folks in each state segregated by zip codes. I just had to look at what 33480 revealed even though the stats were old—from tax year 2011.

Here’s some of what I found out:

•In 2011, there were about 145 million tax returns filed in the U.S. Of them, about 190,000 had adjusted gross income ranging from $1 million to $10 million-plus.

•In all of Florida that year over 9.4 million-tax returns were filed.

• In Palm Beach’s 33480 zip code, 5,534 returns were filed.

• Of those 33480 returns 1,411 had adjusted gross incomes from $1 to under $25,00; 367 showed adjusted gross incomes from $75,000 and under $100,000; and 1,516 revealed adjusted gross incomes of $200,000 or more.

• 192 returns in the 33480 zip code showed they had received unemployment compensation. Of those, 97 had AGIs of under $25,000; 74 between $25-50,000; and 21 for those with AGIs between $75,000 and under $100,000. Whew: There were no returns showing unemployment compensation on those from $100,000 or more.

•And while everyone knows that Social Security benefits/income, who gets it, how much they ought to get, what the size of the cost of living increases ought to be etc. etc. may be a hot political topic, a number of 33480 filers receive monthly checks from Uncle Sam: Of the 2,460 who receive Social Security benefits in that zip, the largest number of them, 950, having AGIs of $200,000 or more.

When it comes to Social Security, it looks like the retired and rich Palm Beachers don’t mind collecting that check each month.

There is a lot more information about the filings for those in the 33480 zip code at the IRS website under the heading: “Individual Income Tax Returns: Selected Income and Tax Items by State, ZIP Code, and Size of Adjusted Gross Income, Tax Year 2011.”

No matter what you think of the Affordable Care Act, the mere mention of it ignites fiery responses. Most recently the hoopla has been about the likely number of jobs that will be lost in the coming years because of this health care law.

Losing a job is typically never a good thing for the individual who has been axed or labor market reports. So it’s not unusual that a recent Congressional Budget Office (CBO) report about that subject got talking heads seriously yapping.

Before clearing the air with words straight from the horse’s mouth, two things to keep in mind are that the CBOs estimates are just that—estimates. Nothing carved in granite here.

The second thing is we’re talking what could happen three to 10 years from now. Really? We all know that hitting the bull’s eye on future figuring isn’t an exact science. All of which means, why argue about a shifting sands future when knowing what tomorrow will bring is as much of a surprise on Wall Street as is what’s going on within our economy?

To come as close as possible to setting the facts straight and quelling the controversy surrounding the possibility of job loss and health care, here are two questions the CBO addressed in their report titled ” Frequently Asked Questions About CBO’s Estimates of the Labor Market Effects of the Affordable Care Act” and bits of their answers:

Q: Will 2.5 Million People Lose Their Jobs in 2024 Because of the ACA?

A: “No, we would not describe our estimates in that way.

We wrote in the report: “CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.” The reason for the reduction in the supply of labor is that the provisions of the ACA reduce the incentive to work for certain subsets of the population…..Therefore, some people will decide not to work or to work fewer hours than would otherwise be the case—including some people who will choose to retire earlier than they would have otherwise, and some people who will work less themselves and rely more on a spouse’s earnings……Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs….”

Q: Why Did CBO Revise its Estimates of the Labor Market Effects of the ACA?

A: “The baseline economic and budgetary projections developed by CBO incorporate our estimates of the future effects of fiscal policies under current law. We update our budget and economic projections regularly to account for new information and analysis regarding federal fiscal policies and many other influences on the economy and the budget…… In producing this year’s projections, one area on which we focused was the labor market, in light of both its importance and the slow growth of employment during the past several years. One aspect of that intensive examination of the labor market was a review of our previous analysis of the effects of the ACA…… As a result of that new analysis, we concluded that our earlier estimate had been too small…”

Q: Are You Sure That CBO’s Current Estimates of the Labor Market Effects of the ACA Are Accurate?

A: “No, we are not sure that our current estimates are accurate, because our estimates are always uncertain….”